Mississippi Regulators Strive for Compromise With New Net Metering Rule

Julia Pyper is a Senior Editor at Greentech Media covering clean energy policy, the solar industry, grid edge technologies and electric mobility. She previously reported for E&E Publishing, and has covered clean energy and climate change issues across the U.S. and abroad, including in Haiti, Israel and the Maldives. Julia holds degrees from McGill and Columbia Universities. Find her on Twitter @JMPyper.

Mississippi has become the newest state to adopt net energy metering for distributed solar projects -- albeit with some limitations.

Net metering, a crucial policy for distributed solar PV, requires utilities to compensate residences and business for the excess power they put back onto the grid. Forty-four states plus the District of Columbia have already implemented net metering policies that credit customers at the full retail rate for electricity.

The Mississippi Public Service Commission finalized its net metering rule last Thursday, five years after opening the docket in 2010.

A study published last year on behalf of the Mississippi PSC determined that it is in the best interest of all customers to develop a net metering policy. Last week’s decision underscored the study’s findings.

“[T]he Commission finds a need for net metering because such a program supports consumers’ right to self-supply electricity as balanced by the need and right to connect to the grid, provides increased consumer choice and introduces innovation into a market dominated by monopolies, has the potential to put downward pressure on rates and provide benefits to all ratepayers, and constitutes a substantial step toward creating a viable solar market in Mississippi,” according to the rule.

Despite these statements, regulators chose not to credit net-metered customers at the full retail rate for electricity, departing from the norm. Instead, Mississippi’s program credits customers at the wholesale electricity rate, plus 2.5 cents per kilowatt-hour.

The program was intended to be a compromise between Mississippi’s regulated utilities -- Entergy and Mississippi Power -- and solar industry advocates. The utilities argued for a credit rate of 4 to 4.5 cents per kilowatt-hour, citing concerns that net metering would increase the cost of power and shift costs onto non-participating customers. Pro-solar groups argued for a credit closer to Entergy’s retail rate of about 10 cents per kilowatt-hour, based on the benefits laid out in the PSC study.

Under the final decision, customers exporting solar power to the grid in Mississippi will be compensated between 7 and 7.5 cents per kilowatt-hour, depending on the utility. The commission plans to reassess the rates in three years, once the “actual benefits” can be determined.

The rule also requires Entergy and Mississippi Power to credit an additional 2 cents per kilowatt-hour for the first 1,000 low-income customers that install net-metered solar projects.

So far, the Mississippi ruling has received a tepid response.

Mississippi Power said it is reviewing the rule and would issue further comment at a later date. In the meantime, the company underscored that it believes “a net metering rule should ensure that all customers pay their fair share for the availability and use of the electric grid.”

Jeff Cantin, president of the Gulf States Renewable Energy Industries Association, said the PSC’s decision is needlessly complicated and conservative for a state that has almost no solar market to speak of.

“Utilities are trying to put a program in place that should be thought of 10 years from now,” he said in a phone interview. “What we need now are simple policies that are fair for ratepayers.”

“The compromise is for utility shareholders,” he added. “The ratepayers did not win this round.”

Mississippi’s net metering program is available to both residential and commercial projects up to 20 kilowatts and 2 megawatts of capacity, respectively. Overall, the net metering program is limited to 3 percent of total system peak load, which is higher than the 0.5 percent cap in neighboring Louisiana, but well below the limits set in more mature solar markets like New York and Vermont.

Investor-owned utilities are expected to launch their net metering programs in January. Co-ops have nine months to comply with the PSC decision or propose their own rules.

The adoption of net metering in Mississippi comes as several other states look to roll back or terminate their policies.

In Louisiana, regulators recently voted to uphold the state’s limit on net-metered PV at 0.5 percent of each utility’s peak load. Entergy Louisiana announced last week that it has exceeded the net metering cap, and will no longer compensate net-metered solar projects at the retail rate starting in January 2016.

Entergy told state regulators that as of October 2014 there were 8,203 PV systems under net metering in its service area, with a total capacity of 47.4 megawatts, or 0.57 percent of peak electricity demand. Most other utilities in the state are expected to lower compensation or close their net-metering programs in the coming weeks.

Meanwhile, regulators have less than a month left to decide the future of net energy metering in Nevada, where NV Energy is pushing to reduce the credit by roughly half. The California Public Utilities Commission is currently crafting a successor regime to the state’s retail-rate net metering program, with a decision expected by early 2016. And in Massachusetts, failure to pass legislation that would have lifted the state’s net metering cap could cause the state’s commercial solar sector to miss out on 100 megawatts of development.

Overall, more than half of U.S. states were either studying or changing their net-metering policies in the third quarter of 2015, according to a recent report by the NC Clean Energy Technology Center.

Net metering has helped solar transition from “a boutique item” to something more common, said Benjamin Inskeep, energy policy analyst at the center. “As a result, utilities are saying policies need to be revised.”

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